What Does Labour’s New Workers’ Rights Bill Mean for Employers?

Earlier this year, Labour pledged to overhaul the employment landscape in a ‘pro-business, pro-worker’ approach, tackling poor working conditions and providing workers with more rights. Since then, on 10th October, the government published a press release revealing the Employment Rights Bill (the ‘Bill’). This includes 28 new employment reforms and proposes fundamental landmark changes. However, since several of these proposals will need to go through a consultation process and no implementation date has been outlined, it is likely that the fundamental changes will not take effect until at least 2026. Regardless, as an employer, you should be aware of and prepare for these changes early. This article provides an overview of the government’s direction concerning workers’ rights and your changing obligations as an employer. 

Key Changes 

Changes to Statutory Sick Pay (SSP) 

Currently, SSP is only payable to those who are:

• classed as an employee (or those with worker status);
• earn an average of £123 per week, as per the lower earnings limit; and 
• have been ill for more than three days in a row. 

Under the Government’s new proposals:

• SSP will become payable from day one; and 
• the lower earnings limits will be removed to ensure that all employees are eligible to be paid for their sickness. 

A caveat to this is that the Bill indicates that, although the lower earnings limit will be removed, low earners may receive less than the statutory rate. Currently, this is not the case. We are awaiting further clarification as to the practical implications of this. 

The critical consideration here is that eventually, you will be obligated to pay your employees from day one of their sickness, irrespective of their income. 

Ending Zero-Hour Contracts

Under the Bill, the Government is seeking to make ​​significant changes to the use of zero-hour contracts. Zero-hour contracts, also called casual contracts, typically cover ‘piece work’ or ‘on-call’ roles.

This means:

• your employees are available to work when needed;
• you are not obligated to provide work; and
• your employees can decline work when offered.

Currently, there is no obligation on you to provide a zero-hour worker with guaranteed hours, reasonable hours, or compensation if a shift is cancelled. 

However, under the newly proposed Bill, the Government is seeking to introduce the following changes: 

• Guaranteed Hours: Zero-hour workers will be entitled to guaranteed hours based on their work patterns over a reference period. 
• Compensation: These workers will gain a new right to compensation when you cancel or rearrange a shift on short notice. They will also be able to seek recourse in the employment tribunal and potentially be awarded further compensation. 

To understand how this will work in practice, the Bill must pass further readings and clarify the meanings of short notice, compensation and guaranteed hours. 

Additionally, the government will conduct a consultation, so depending on the responses, further elements could be added or removed from this proposal. 

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Unfair Dismissal and Fire and Rehire 

The planned law will make it illegal to fire and rehire employees who refuse contractual changes unless your business is about to collapse. When judging if a dismissal is fair, the law will examine:

• how well you consulted with your staff; and 
• whether employees were offered compensation for accepting changes. 

Day One Rights 

Employees are set to have some of their entitlements converted into day-one rights, including: 

• unfair dismissal, 
• statutory probationary periods; and 
• paternity and parental leave. 

Additionally, the scope of bereavement leave will be extended, and the draft legislation needs to clarify this further. 

What these reforms will look like in practice will be revealed when the laws are discussed and passed in Parliament. However, what we do know is that these day-one rights will:

• seek to provide staff with more generous protections; and 
• place more scrutiny and consideration on companies taking action such as dismissal. 

Other Changes to Look Out For

Flexible Working 

Under the current flexible working arrangements from April 2024, the Government sought to widen the scope of flexible working. Currently, flexible working is a day-one right, where an employer can only refuse a request on a limited number of bases. 

The Bill seeks to go further and provide employees with a mandatory consultation process. This means that you will have to:

• consult the employee about their flexible working request; and 
• if denying it, inform the employee in writing of the reasons. 

This is similar to ACAS’ updated guidance on flexible working. As such, you are likely already following this process, which will have a minimal impact on your business. 

The Right to Switch Off

After some initial pushback from leading businesses, the government will continue to consult on providing the right to switch off after business hours.

However, the government has indicated that this could potentially be issued as guidance rather than law. It will be interesting to see how this develops as the reforms develop.

Greater Worker Protections 

Some further protections have also been explored in the initial press release. These include: 

• Equality Action Plans: This applies to employers with over 250 employees. It is a way for them to show the steps they are taking to address gender equality, including the gender pay gap and menopause. 
• Trade Union Reforms: This will require you to provide a written statement outlining an employee’s rights to join a trade union when they join your company. Additionally, it will simplify industrial action ballots (including abolishing the minimum turnout thresholds) and repeal the Strikes Minimum Service Levels legislation. 

However, further details will be revealed when the government conducts consultations, and the draft legislation reaches Parliament. 

Key Takeaways

Overall, Labour’s new Employment Rights Bill introduces 28 reforms aiming to improve workers’ rights and reshape employer obligations. Key changes include:

• statutory sick pay from day one; 
• guaranteed hours for zero-hour workers; and 
• protections against fire and rehire practices. 

The Bill also proposes broader day-one rights, such as protection from unfair dismissal and enhanced parental leave. Additionally, you must consult employees over flexible working requests and consider new guidelines such as the right to switch off. Although the Bill requires further consultations and parliamentary approval, you should prepare for these potential reforms, as they will likely be enacted by 2026.

If you need help navigating the changing employment law landscape, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.

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